NATIONAL OPEN UNIVERSITY OF NIGERIA

UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF MANAGEMENT SCIENCES
JANUARY/FEBRUARY 2018 EXAMINATION

COURSE CODE:        BUS406                                                                          

COURSE TITLE:         Analysis for Business Decisions

CREDIT UNIT:           3

INSTRUCTION:        1. Indicate your Matriculation Number clearly

2. Attempt question one (1) and any other three (3) questions; four questions in all

3. Question one (1) is compulsory and carries 25 marks, while the other questions carry 15 marks each.

4. Present all your points in a coherent and orderly Manner

TIME ALLOWED:     2½ Hours

1a. Describe the components of Decision making. 8marks

b. A farmer is considering his activity in the next farming season. He has a choice of three crops to select from for the next planting season – Groundnuts, Maize, and Wheat. Whatever is his choice of crop; there are four weather conditions that could prevail: heaving rain, moderate rain, light rain, and no rain. In the event that the farmer plants Ground nuts and there is heavy rain, he expects to earn a proceed of N650,000 at the end of the farming season, if there is moderate rain N1,000,000, high rain – N450,000 and if there is no rain –  (-N1,000) If the farmer plants Maize, the following will be his proceeds after the harvest considering the weather condition: heavy rain – N1,200,000, moderate rain – N1,500,000, Light rain – N600,000 and no rain N2000. And if the farmer decides to plant wheat, he expects to make the following: heavy rain – N1,150,000, moderate rain – N1,300,000, Light rain- N800,000 and No rain – N200 -000.

The farmer has contact you, an expert in OR to help him decide on what to do.

Required: Construct a payoff matrix for the above situation, analyse completely and advise the farmer on the course of action to adopt.  Assume   a = 0.6.            17marks

2a. Discuss four steps in Decision Theory Approach 10marks

b. What are the errors that can occur in making decisions? 5marks

3a. Define project management    7marks

b. State the assumptions of games theory.  8marks

4a. Explain the Monte Carlo Simulation (5marks)

b. Consider the contingency Matrix Below

Contingency Matrix

Represent the above payoff matrix on a decision tree and find the optimum contingency strategy.10marks

5a. Discuss the concept of entropy 5marks

  b. Present a brief and concise history of the waiting line model. 10marks

6a. Using relevant diagram, define Systems Theory.    5marks

b. A stock keeper has to supply 12000 units of a product per year to his customer. The demand is fixed and known and the shortage cost is assumed to be infinite. The inventory holding cost is N 0.20k per unit per month, and the ordering cost per order is N350. Determine

1. The optimum lot size q₀         3marks
2. Optimum scheduling period t₀          3marks
3. Minimum total variable yearly cost.     4marks